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Chapter 18© Mike W. Peng (The Ohio State University) 1 Chapter 18: Global Human Resource Management Learning objectives: 1. Understand the strategic role.

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Presentation on theme: "Chapter 18© Mike W. Peng (The Ohio State University) 1 Chapter 18: Global Human Resource Management Learning objectives: 1. Understand the strategic role."— Presentation transcript:

1 Chapter 18© Mike W. Peng (The Ohio State University) 1 Chapter 18: Global Human Resource Management Learning objectives: 1. Understand the strategic role of HRM 2. Focus on four key areas: (1) staffing, (2) training and development; (3) compen- sation, and (4) labor relations 3. Draw managerial implications

2 Chapter 18© Mike W. Peng (The Ohio State University) 2 Outline 1. The strategic role of HRM 2. Staffing 3. Training and development 4. Compensation 5. Labor relations 6. Managerial implications

3 Chapter 18© Mike W. Peng (The Ohio State University) 3 1. The strategic role of HRM (A) HRM: Activities an organization carries out to utilize its human resources effectively (B) It is people who formulate and implement strategies!

4 Chapter 18© Mike W. Peng (The Ohio State University) 4 2. Staffing (I) (A) Three international staffing approaches: –Ethnocentric: Focus on home country norms Good for an international strategy –Polycentric: Emphasize host country norms Good for a multidomestic strategy –Geocentric: Flexibility is the key Good for global and transnational strategies

5 Chapter 18© Mike W. Peng (The Ohio State University) 5 Types of staffing policy Ethnocentric Key management positions filled by parent-country nationals Polycentric Host-country nationals manage subsidiaries, parent company nationals hold key Headquarter positions Geocentric Seek best people, regardless of nationality

6 Chapter 18© Mike W. Peng (The Ohio State University) 6 2. Staffing (II) (B) Expatriates –A manager working in a different country –High expatriate costs: $300,000 annually –High expatriate failure rates: More than 10% U.S.EuropeanJapanese expat failure76%41%24% –No. 1 problem for U.S. and European expats: Inability of spouse to adjust –No. 1 problem for Japanese expats: Inability to cope with the larger responsibility

7 Chapter 18© Mike W. Peng (The Ohio State University) 7 2. Staffing (III) (C) Expatriate selection –Self-orientation: Self-confidence –Others-orientation: Open mindedness –Perceptual ability: Cross-cultural sensitivity –Cultural toughness: Ability to adjust to distant cultures –In other words, dont select expats just based on technical skills and domestic track record!

8 Chapter 18© Mike W. Peng (The Ohio State University) 8 3. Training and development (I) (A) Expats training –Only 30% expats receive training –Always a good idea to involve family –Types of training Cultural training: Deeper understanding Foreign language training: Basics will be helpful Practical training: The nuts and bolts for survival –Timing and intensity

9 Chapter 18© Mike W. Peng (The Ohio State University) 9 Training and development (II) Training: obtaining skills for a particular (foreign) posting. Development: develops managers skills over his/her career in the Firm.

10 Chapter 18© Mike W. Peng (The Ohio State University) Training and development (III) Training Time Departure/entry Practical training Language and cultural training 1. Culture 2. Language 3. Practical

11 Chapter 18© Mike W. Peng (The Ohio State University) Training and development (IV) (B) Repatriation training –Typically ignored –Dreadful results for many companies (see next slide)

12 Chapter 18© Mike W. Peng (The Ohio State University) 12 Repatriation of expatriates Didn t know what position they hold upon return. Firm vague about return, role and career progression. Took lower level job. Leave firm within one year. Leave firm within three years % 18-10

13 Chapter 18© Mike W. Peng (The Ohio State University) Compensation (I) (A) National differences in compensation –Pay managers in different countries according to local norms, or on a global basis? –Ethnocentric firms: Pay expats according to their home country standards –Polycentric firms: Pay local rates –Geocentric firms: Equalization seems to be the only way out in the long run; but it can be very costly

14 Chapter 18© Mike W. Peng (The Ohio State University) 14 National differences in compensation Table 18.4CEOHR Director AccountantMfg. Employee Argentina$860,704$326,874$63,948$17, 884 Canada742,228188,07044,86636,289 Germany421,622189,78561,37536,934 Taiwan179,486102,49130,65211,924 UK719,665268,302107,83928,874 US1,403,899306,18166,37744,680

15 Chapter 18© Mike W. Peng (The Ohio State University) 15 Cost of living Figure 17.3 New York = 100, June 1997 Source: The Economist, June 28, 1997, p New York = 100

16 Chapter 18© Mike W. Peng (The Ohio State University) Compensation (II) (B) Expatriate pay: Very expensive! –Base salary: Similar to similar positions domestically –Foreign service premium: 10-30% base salary, as an inducement –Allowances HardshipCost of living HousingEducation –Taxation and benefits

17 Chapter 18© Mike W. Peng (The Ohio State University) 17 A typical balance sheet Reserve Goods and Services Housing Income Taxes Home and Host- Country Income Taxes Premiums and Incentives Home- Country Salary Host- Country Costs Host-Country Costs Paid by Company and from Salary Home- Country Equivalent Purchasing Power Additional Costs Paid by Company Figure

18 Chapter 18© Mike W. Peng (The Ohio State University) International labor relations (A) Domestic unions: Resent job losses (B) Foreign unions: Resent exploitation by foreign bosses and companies (C) Global strategies of organized labor: –Trying to establish international labor organiztions –Lobbying governments to restrict MNEs –Lobbying UN to regulate MNEs –None has been very successful (e.g., Seattle protest in December 1999)

19 Chapter 18© Mike W. Peng (The Ohio State University) Managerial implications (A) Pay attention to cultural differences and their impact on HRM (B) Focus on key problem areas: –Selection, training, and repatriation of expats; –Development of local managers; and –Compensation (C) Be open-minded enough to accommodate changes


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